Symantec buys encryption specialist PGP for $300M

Symantec will acquire encryption specialist PGP and endpoint security vendor GuardianEdge Technologies for US$300 million and $70 million, respectively, the company said on Thursday.

Both are privately held companies. Symantec said the deals are subject to regulatory approval but are expected to close by June.

Symantec said the companies' combined specialties in standards-based encryption for e-mail, file systems, removable media and smartphones will complement its security offerings, such as its gateway, endpoint security and data-loss prevention software.

Encrypting information offers a higher level of security in case data is lost or stolen. Earlier this month, the U.K. increased the fine under the Data Protection Act for organizations that lose data to a maximum of £500,000 (US$765,000).

Other security vendors such as McAfee and Sophos had already made moves to acquire encryption technology for their products, said Jon Oltsik, senior principal analyst with the Enterprise Strategy Group. McAfee bought Safeboot in 2007 for $350 million, and Sophos acquired Utimaco in 2008 for €217 million (US$288 million).

Symantec was lacking in encryption technology such as full-disk encryption for desktops and laptops, Oltsik said. PGP's key management platform is an enterprise-class product, he said.

"The market was sort of angling in this direction and yet Symantec really sat on the sidelines until today," Oltsik said.

PGP was founded by Phil Zimmermann who developed e-mail encryption software called "Pretty Good Privacy," which is still widely used today. After the software was published for free in 1991, Zimmermann was the target of a criminal investigation due to U.S. restrictions on the export of encryption technology.

But under U.S. law, Zimmermann could publish PGP's cryptographic source code in a book, as restricting it would violate free speech rights. The source code was published, then the books were scanned using optical character recognition, according to Zimmermann's Web site. He founded PGP in 1996 after the government eventually dropped the case.

Symantec said it will standardize its products on PGP's key management platform, which allows administrators to centrally manage encryption tasks. That platform will be integrated into the Symantec Protection Center, a management console for its products.

GuardianEdge, which specializes in security for laptops, portable storage devices and smartphones, is already a partner of Symantec for its Endpoint Encryption product. The company has particular strength in the government market, Symantec said.

The two companies will become part of Symantec's Enterprise Security Group, headed by Francis deSouza, senior vice president.

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